Table of Contents
Introduction
Entrepreneurs are people who defy the norm of being employees but assume the risk and responsibilities to set up businesses that give them the desired rewards. Entrepreneurs are use innovation and creativity to develop and run business enterprises. However, not all entrepreneurs have successful businesses. Anderson (2014), reported that half of business start-ups fail in the US. This essay will explore factors that determine success of an entrepreneurship by reviewing the auto biography of Richard Branson (Branson, 2011). The second part will discuss different types of business models used by successful entrepreneurs and the impact of entrepreneurship in the economy and quality of life.
Determinants of entrepreneurial success
Different entrepreneurs are motivated by different factors and circumstances that influence their entrepreneurial success. However, there are common factors that influence business enterprise such as the traits of the entrepreneur, motivating factors, finance, business model and the role of the family or state in providing a conducive business environment (Bridge and O’Neill, 2012; Burns, 2010).
Zainol and Ayadurai (2011), observed that entrepreneur traits had an impact on the success of the business. Entrepreneurs differ in their ability to take risks, creativity, proactivity, vision, self-motivation and ability to have independence. Self-motivation is the force that drives someone to do what they do. Entrepreneurs who are self-driven have an ability to endure the discouragements that come with starting an entrepreneurial venture.
Self-motivation keeps them moving above all the odds to achieve success. Richard Branson autobiography depicts self-motivation as the core determinant of his success. He sets his own goals and he initiated all his business ventures. The Student Magazine is a clear example of how self-motivated he was. He initiated the idea and contacted several people until the idea materialized (Branson, 2011, pp. 100–122). His self-motivation is demonstrated from childhood when he learnt to swim to win a prize from Auntie Joyce. He had to swim in a river on the way home having failed to swim desperately during the vacation (Branson, 2011, pp. 33–58).
The other trait exhibited by Richard Branson was his proactivity and creativity. While he was setting up his first Virgin Records shop at Oxford Street he took time to count the number of people on the streets to identify the busiest street where he could pay as little rent as possible. Moreover, he cunningly negotiated for a free shop space. The same traits are exhibited when Mike refused to perform even a few hours to the concert that was advertised and crowds were gathering. Instead of giving up, Branson opted to give him his valued car to woo him into performing. His creativity that day contributed immensely into the growth and publicity of his records shop (Branson, 2011, pp. 140–198).
The height of his creativity happened when a flight was cancelled while he was travelling to Puerto Rico and many people were stranded in the airport. He booked a charter flight, divided the price by the number of seats and advertised seats to the stranded passengers. The charter plane was filled and passengers payed for the price of booking. That is how the idea of Virgin Airways was born (Branson, 2011, p. 371).
The autobiography justifies to describe Branson as an opportunist. Throughout his autobiography, he is portrayed as a person who saw opportunities and grabbed them without hesitation. To begin with is the experience he had when his then girlfriend was looking for abortion services. He felt there were teens out there who had similar or more challenges and didn’t know where to seek healthcare services. He set up Student Advisory Centre (Branson, 2011, pp. 166, 1336) where he could direct students who had various problems to skilled healthcare providers.
Another incident of opportunism is when he set to bid EMI for a takeover when it had financial. Although he did not manage to buy it, it depicts him as a great opportunist (Branson, 2011, p. 565). In another incident of opportunism, he discovered that the intergovernmental agreement allowed two British carriers to Japan. With exit of B-Cal, he set to introduce Virgin Airways to that route (Branson, 2011, p. 561).
The independent-mindedness of Branson is seen in the many instances he part ways with his business partners when he felt he needed to have independence in running of the business. The first instance is when he part ways with Nik due to disagreement on the management of Student Magazine. In another break out, he bought Nik’s 40% shares and part ways since Nik could not agree with his expansion plans (Branson, 2011, p. 574). Branson vision to start an airline made his business partner Simon to part ways. Branson was comfortable to part ways with those who differed with him since he wanted independence to think and dream big (Branson, 2011, p. 440).
Those traits were not the only factors that propelled Branson to success in business venture, but his finance mobilisation and management also contributed immensely. In his own admission in the autobiography, availability of money was not a hindrance to business venture. His initial businesses relied heavily on family support especially his mother and Auntie Joyce as well as ploughing back the profits. However, he relied heavily on overdraft from his Coutts bank and other investment banks when he could not get over $3,000,000 from Coutts. At one time he relied on public shareholding before withdrawing. He recruited more efficient and qualified financial managers to replace his strict childhood friend Nik during tough financial seasons (Branson, 2011, p. 108,206,462,472,566).
Business models are employed implicitly or explicitly by business owners. A business model is useful in describing the design of a business, the mechanisms with which it creates and delivers value to its customers and how it employs those mechanism. A good business model defines key tasks, resources, value creation and value delivery to the customers. It identifies the key customers and their worth and describes how the business will make money (Barringer, 2012; Teece, 2010). Branson autobiography describes his business in a manner suggesting he took keen interest in designing his business models.
He restructured his businesses severally to reach more markets, reduce wastage and mobilise money severally. The initial start-up of Virgin Music was a partnership with Nik at 40-60 percent shareholding. He adopted a similar model when he was adventuring on Virgin Airways where he made an equal partnership with Randolph. Branson made several strategic alliances to ensure his businesses succeeded. One of the alliances when Virgin Shops could not buy records directly and had to make an arrangement with Raymond’s. Raymond had to buy many records and distribute some to Virgin shops at a 5% fee. The other incident is when Virgin Records made an arrangement with Island Records for pressing and distribution of the first album from Virgin Records. Virgin Records could not handle the demand and supply due to its limited capacity (Branson, 2011, p. 190,262,296).
Moreover, Branson’s business adventures were all aimed at promoting a superior customer value than his rival businesses. For example before starting the Virgin Shops, he studied the practices of similar shops and discovered that they had not valued their customers or made them feel special. This created a business niche for him. In his design of Virgin Shops, he made it look more than just a shop but another home where customers would feel welcome, relax and enjoy while selecting the best records (Branson, 2011, p. 260)
Although this model almost hurt the business due to many youngsters idling in Virgin Shops, it promoted customer loyalty. Branson noticed Simon’s love and knowledge of music. He tapped on his talent to select the best records to be retailed in virgin Shops as a business strategy by providing the best value for the customers (Branson, 2011).
The early start ups were started informally before Branson recruited experts who helped reorganize businesses and streamline the internal processes better that his friend Nik had done. However, his set up for a Virgin Records implied he had a clear business plan, though not written down. He first secured Manor, recruited Tom Newman, bought the instruments that were required to set up the studio and identified a singer, Mike Oldfield, who was ready to practice and release his first single. While setting up Virgin Airways, he took time review a proposal sent by Randolph and to evaluate the requirements that should have been met. In all his business, Branson surveyed the market before making a decision to invest (Branson, 2011, pp. 222–274, 432–448).
Business models of sustainable entrepreneurship
Successful entrepreneurs adopt business models and processes to introduce new business and sustain them in a competitive market. For example the Novelty-Centred Business Model is a useful model for entrepreneurs who would want to improve the quality of goods or services through improving design, value addition, improving connectivity, linkages or reaching to new customer grounds. Such a business model improves the overall value of the business and creates a successful venture for entrepreneurs to not only control competition from established competitors but also to make adequate sales to keep them in the market (Wikström et al., 2010, pp. 832–841)
Severally, Richard Branson adopted Novelty-Centred Business Models. From his first enterprise in Student magazine where he designed a student focused magazine that had not existed before, to how he designed his virgin shops, virgin Music, and Virgin Airways. Virgin businesses always introduced a unique way of doing business to improve customer satisfaction and provide value to the customers. Virgin Airways introduced the first of its unique serving to customers in the middle of flights. Before Student Magazine existed, students had no source of information and artists and companies did not have a way of reaching students (Branson, 2011).
The second type of business model is efficiency driven businesses. They aim at reducing the costs of doing business to maximise value to the customers, suppliers and the owners. By reducing business costs, business complexity, and unclear business processes, the business is able to reduce its liabilities and maximise gains (Wikström et al., 2010, pp. 832–841). Branson (2011), records that Richard Branson never believed in contracting a business to survive. Most of the times, he expanded the business to newer horizons and thus kept it performing. However, in one instance where the liabilities were rising beyond manageable levels, he recruited experienced financial managers who recommended closure of some of the performing subsidiaries and streamlined business operations.
Impact of business in an economy
The economic productivity is related to businesses that affect a certain economy. High growth in the number of businesses results into new innovations in the economy and subsequently result into economic growth that is indicated by growth in Gross National Income and Per Capita Income (Carree and Thurik, 2010, pp. 568–575). Similarly, growth of businesses is associated with high expansion of those businesses resulting into more employment opportunities. The autobiography of Richard Branson provides a clear elaboration of this scenario. During his start-ups, he worked alone or with a few of his friends. But as the businesses grew from Student Magazine to Student Care Centre, Virgin Shops and Virgin Music to Virgin Airways, he had employed over 3,000 people. He hated the several moments he had to retrench employees to keep to sustain businesses (Branson, 2011, p. 472).
The benefits of growth in businesses are not limited to job creation and economic growth but is also extended to increase in diversity and variety of goods and services in addition to knowledge spill overs (Ackermann, 2012, pp. 1–12; Decker et al., 2014, pp. 2–24) Growth of businesses results to happy society and vice versa. When businesses grow, entrepreneurs and employees live a happier life due to increased job satisfaction and ability to meet the basic needs (Maina and others, 2014, pp. 87–96).
Besides, the business provide a solution to the needs of citizens thereby promoting their wellbeing. Absence of goods or services to meet the needs of people is cause of depression (Naudé, 2013, pp. 1–9). For example, when passengers were stranded at the airport due to cancelled flight, they were in agony. Branson devised a quick method that solved the problem and the passengers were happy as evidence by their suggestion that he should own an aircraft (Branson, 2011, p. 372).
Conclusion
Having examined the factors that led to success of his business above, it is evident that Richard Branson creativity, independence, vision, proactivity and mainly his ability to identify and grab opportunities made him a successful businessman. His personality traits coupled with his ability to design Novelty-Centred Business Models earned him valued customers. Through the growth of his enterprises, he not only improved his wellbeing and reputation but also provided employment to thousands of people and largely contributed to growth of the economy. His ventures solved the needs of the customers and contributed to their wellbeing.
We can do it today.
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